Homes for sale by owners in Canada Homes For Sale By Owner
List your properties with images for free
Menu
Visitors
Ontario
British Columbia
Alberta
Quebec
Saskatchewan
Manitoba
New Brunswick
Newfoundland
Nova Scotia
Prince Edward Island
ETC

Demand ease (Construction to decline four per cent)

If ever a crystal ball was foggy, it would be one looking at condo construction in Calgary in 2008.

As many as 3,400 multi-family units are now under construction in the inner city's Beltline area alone -- and there are another 2,100 planned at a time when sales stalled for at least the last quarter of 2007.

While official counts are not yet in, Canada Mortgage and Housing Corp. is calling for a total of 6,250 construction starts of condos for 2007, down slightly from 6,564 in 2006.

This year's total will likely drop another four per cent to reach 6,000, predicts CMHC.

"The high level of multi-family starts has increased the units under construction (city-wide) to 8,948 units as of August, up over 11 per cent from the previous year and to the highest level since 1982," said Lai Soing Louie of CMHC in his most recent Housing Market Outlook report.

But that high number will slowly drop, he said. "Units under construction are expected to peak within a year as demand for condominiums begins to ease with the lower level of net migration."

Net migration refers to the inflow of people to Calgary minus the outflow. It has been dropping since the boom in 2006 brought 31,223 people to the city.

Levels in 2007 must still be calculated, but they will likely reach 22,000, dropping to 18,000 in 2008, says Louie.

The high cost of housing has had a see-saw effect on housing demand. More first-time buyers people are choosing condos due to the higher price of single-family homes.

Although CMHC doesn't break down average prices of condos, the average single-family home price is expected to hit $550,000 this year -- eroding affordability and placing many entry-level buyers into condos.

Even so, Louie says that "some potential first-time buyers will need more time to save for a down payment, and this will delay their purchase."

On the resale side, the average sale price of single-family homes as of the end of November was $473,551, up more than $150,000 over the average $316,948 for condos.

The previous boom times created plenty of speculation and investment buying in the market, say builders -- and now much of that inventory has been put up for sale, competing with new product.

"For the last two years, companies which are not developers or builders have been able to secure easy financing, so these 'opportunists' bought land to develop," says Naum Shteinbah, general manager of Streetside Development Corp.

"Some of these are likely trying to sell their holdings now. They have the land and some even have the approvals, but no ready takers.

"Other smaller builders can't hold their land, so they are likely selling for less profit."

Add on the individual speculators who bought units in downtown condo towers and are now dumping them on the market to sell, and the flood of units will likely create more of a slowdown before it gets absorbed through sales, says Shteinbah.

He is calling for the market to continue at a slower pace for a maximum of eight months before turning around.

There is also the cost of construction, which won't go down, says Cole Harris, president of the Centron Group, which has as many as 3,500 multi-family units in various stages of development and construction in the Calgary area. Many are downtown or in the Beltline.

If ever a crystal ball was foggy, it would be one looking at condo construction in Calgary in 2008.

As many as 3,400 multi-family units are now under construction in the inner city's Beltline area alone -- and there are another 2,100 planned at a time when sales stalled for at least the last quarter of 2007.

While official counts are not yet in, Canada Mortgage and Housing Corp. is calling for a total of 6,250 construction starts of condos for 2007, down slightly from 6,564 in 2006.

This year's total will likely drop another four per cent to reach 6,000, predicts CMHC.

"The high level of multi-family starts has increased the units under construction (city-wide) to 8,948 units as of August, up over 11 per cent from the previous year and to the highest level since 1982," said Lai Soing Louie of CMHC in his most recent Housing Market Outlook report.

But that high number will slowly drop, he said. "Units under construction are expected to peak within a year as demand for condominiums begins to ease with the lower level of net migration."

Net migration refers to the inflow of people to Calgary minus the outflow. It has been dropping since the boom in 2006 brought 31,223 people to the city.

Levels in 2007 must still be calculated, but they will likely reach 22,000, dropping to 18,000 in 2008, says Louie.

The high cost of housing has had a see-saw effect on housing demand. More first-time buyers people are choosing condos due to the higher price of single-family homes.

Although CMHC doesn't break down average prices of condos, the average single-family home price is expected to hit $550,000 this year -- eroding affordability and placing many entry-level buyers into condos.

Even so, Louie says that "some potential first-time buyers will need more time to save for a down payment, and this will delay their purchase."

On the resale side, the average sale price of single-family homes as of the end of November was $473,551, up more than $150,000 over the average $316,948 for condos.

The previous boom times created plenty of speculation and investment buying in the market, say builders -- and now much of that inventory has been put up for sale, competing with new product.

"For the last two years, companies which are not developers or builders have been able to secure easy financing, so these 'opportunists' bought land to develop," says Naum Shteinbah, general manager of Streetside Development Corp.

"Some of these are likely trying to sell their holdings now. They have the land and some even have the approvals, but no ready takers.

"Other smaller builders can't hold their land, so they are likely selling for less profit."

Add on the individual speculators who bought units in downtown condo towers and are now dumping them on the market to sell, and the flood of units will likely create more of a slowdown before it gets absorbed through sales, says Shteinbah.

He is calling for the market to continue at a slower pace for a maximum of eight months before turning around.

There is also the cost of construction, which won't go down, says Cole Harris, president of the Centron Group, which has as many as 3,500 multi-family units in various stages of development and construction in the Calgary area. Many are downtown or in the Beltline.

If ever a crystal ball was foggy, it would be one looking at condo construction in Calgary in 2008.

As many as 3,400 multi-family units are now under construction in the inner city's Beltline area alone -- and there are another 2,100 planned at a time when sales stalled for at least the last quarter of 2007.

While official counts are not yet in, Canada Mortgage and Housing Corp. is calling for a total of 6,250 construction starts of condos for 2007, down slightly from 6,564 in 2006.

This year's total will likely drop another four per cent to reach 6,000, predicts CMHC.

"The high level of multi-family starts has increased the units under construction (city-wide) to 8,948 units as of August, up over 11 per cent from the previous year and to the highest level since 1982," said Lai Soing Louie of CMHC in his most recent Housing Market Outlook report.

But that high number will slowly drop, he said. "Units under construction are expected to peak within a year as demand for condominiums begins to ease with the lower level of net migration."

Net migration refers to the inflow of people to Calgary minus the outflow. It has been dropping since the boom in 2006 brought 31,223 people to the city.

Levels in 2007 must still be calculated, but they will likely reach 22,000, dropping to 18,000 in 2008, says Louie.

The high cost of housing has had a see-saw effect on housing demand. More first-time buyers people are choosing condos due to the higher price of single-family homes.

Although CMHC doesn't break down average prices of condos, the average single-family home price is expected to hit $550,000 this year -- eroding affordability and placing many entry-level buyers into condos.

Even so, Louie says that "some potential first-time buyers will need more time to save for a down payment, and this will delay their purchase."

On the resale side, the average sale price of single-family homes as of the end of November was $473,551, up more than $150,000 over the average $316,948 for condos.

The previous boom times created plenty of speculation and investment buying in the market, say builders -- and now much of that inventory has been put up for sale, competing with new product.

"For the last two years, companies which are not developers or builders have been able to secure easy financing, so these 'opportunists' bought land to develop," says Naum Shteinbah, general manager of Streetside Development Corp.

"Some of these are likely trying to sell their holdings now. They have the land and some even have the approvals, but no ready takers.

"Other smaller builders can't hold their land, so they are likely selling for less profit."

Add on the individual speculators who bought units in downtown condo towers and are now dumping them on the market to sell, and the flood of units will likely create more of a slowdown before it gets absorbed through sales, says Shteinbah.

He is calling for the market to continue at a slower pace for a maximum of eight months before turning around.

There is also the cost of construction, which won't go down, says Cole Harris, president of the Centron Group, which has as many as 3,500 multi-family units in various stages of development and construction in the Calgary area. Many are downtown or in the Beltline.

Source: Calgary Herald (Saturday, January 12, 2008)
Feedback